First Pitch: McCutchen, Walker, and the Risk of Unnecessary Contract Extensions

Earlier today, Mike Petriello wrote an article over at ESPN looking at the curse of the contract extension. Petriello pointed out a lot of big extensions that were given out from 2010-2014, well before an extension was needed. A lot of those extensions are now backfiring, such as Ryan Howard’s five-year, $125 M deal, and Joey Votto’s ten-year, $225 M deal, which is currently in year one and is seeing Votto miss a lot of time due to injury.

All of the deals pointed out in the article were signed two years before the extensions actually started. Most of the teams gave out contracts that paid free agent dollars, well before the players reached free agency. Had they waited until the player was actually a free agent, they might have avoided these huge mistakes. For example, Justin Verlander got a five-year, $140 M extension, which starts next year. He would have been a free agent at the end of the 2014 season, and with the way his season has been going, I don’t think he would have touched $140 M this off-season without that extension.

There are two contract situations with the Pirates where we can learn from these lessons, and avoid potential mistakes. Those two situations are with Neil Walker and Andrew McCutchen.

First up is Walker, who is currently having a career year at the plate, which is happening during his age 28 season. He turns 29 in early September. The Pirates have him under control for two more seasons, and he’s eligible for arbitration both years. Walker will be 31 when he’s eligible for free agency.

There have been a lot of calls to extend Walker over the last few years, and that didn’t stop with the season he is currently having. But an extension really doesn’t make sense. At this point, the Pirates aren’t getting any discounts by guaranteeing money to Walker under an extension. It’s not like extending a player after 1-2 years, where you get his first few free agent years at a potential lower rate. The best the Pirates would get by extending Walker is cost certainty over the next two years, along with buying out his free agent years at a rate that probably won’t be different than what he will get after the 2016 season.

Since the Pirates aren’t getting a discount on his free agent years, it makes no sense to extend him two years early. He’s had a history of nagging injuries, and those only project to get worse as he gets older. He’s having a career year at the plate this year, but there’s no guarantee he continues with this performance. It was only two years ago that Chase Headley was having a career year at the age of 28. He dropped back to his career average the following year, and this year he has seen a big decline. If Walker does the same thing, dropping back to his career norm next year, then really falling off in 2016, then an extension would look extremely foolish.

The best thing to do with Walker is to go year-to-year, and then revisit the subject of extending him after the 2016 season.

In McCutchen’s case, there is less of a need for an extension right now. He’s one of the best players in the game, but he’s also under control through the 2018 season. That’s also his age 31 season. A lot of players, even impact players, start to see a steady decline at that point, or shortly after. Even if it’s a shorter extension, the Pirates would be paying for McCutchen’s age 32-36 seasons.

It’s entirely possible that McCutchen could be productive beyond his age 31 season, and even into his age 36 season. He’s not Ryan Howard or Joey Votto, where his body will start to break down faster when he gets older. But that’s still four years away, not counting the current season.

A lot can happen in four years. McCutchen could suffer a serious injury. He could start to show signs of a decline. The Pirates could even run into a situation where they don’t need to spend money on his expected declining years, which would happen if Austin Meadows emerges as an elite outfield talent, to join Gregory Polanco and Starling Marte.

To put this timeline in perspective, four years ago McCutchen was in his first full season in the majors. He wasn’t even thought of as an MVP candidate, or a guy who was one of the best players in baseball. Starling Marte was in A-ball, and was having a breakout year as a prospect. Gregory Polanco was playing his first year in pro ball in the US, spending his first of two seasons in the GCL. Meanwhile, Josh Hamilton (age 29), Carl Crawford (29), and Albert Pujols (30) were three of the top hitters in baseball.

Four years ago, it would have been insane to say that the Pirates would have the potential for one of the best outfields in baseball with McCutchen, Marte, and Polanco. It might not have been insane to predict the sudden decline of the likes of Hamilton, Crawford, and Pujols, but I don’t think anyone expected the decline to be so sudden in each case.

I don’t think McCutchen is signing an extension with the Pirates at any point without a team friendly deal. Considering their recent history of developing outfielders, and the extreme uncertainty of what could happen four years from now, it would be crazy to extend McCutchen again. I haven’t seen too much “extend McCutchen” talk yet, outside of the hope that this could happen down the line. But this whole topic is something to remember even two years from now, when McCutchen is only two years away from free agency. The Walker discussion is an easy one, because even in his best year he’s not an elite player. If McCutchen is still an MVP candidate two years from now, that’s going to lead to a big debate about extending him because of his current production at the time, versus the risks of extending him for fear of the unknown two years down the line.

Tim Williams

Tim is the owner and editor in chief of Pirates Prospects. He started the site in January 2009, and turned it into his full time job during the 2011 season. Prior to starting Pirates Prospects, Tim worked with AccuScore.com, providing MLB, NHL, and NFL coverage to various national media outlets, including ESPN Insider, USA Today, Yahoo Sports, and the Wall Street Journal. He also writes the annual Prospect Guide, which is sold through the site. Tim lives in Bradenton, where he provides live coverage all year of Spring Training, mini camp, instructs, the Bradenton Marauders, and the GCL Pirates.

I’ve been echoing those sentiments everytime they come up, mostly about walker. I think that based on some of the comments I’ve received both here and other sites these very valid points are falling on deaf ears. Ah well, tempus fugit, so we shall see soon enough.

pilbobuggins

See what I mean tim.

marty34156

Agreed on Walker. Signed until he’s 31, all kinds of injury issues, and worst of all that includes a bad back. Extending a guy with a bad back that you control until he’s 31 is not that smart.

emjayinTN

Tim: Put me in the disagree column. You can mention a lot of players to compare with ‘Cutch, but the only two that are legitimate in my opinion are Ryan Braun and Evan Longoria. Longoria was extended by TB in 2012, when he still had 3 or 4 years of club control through 2016. He is now signed through his age 36 season in 2023. Braun also received a $100 mil plus extension from the Brewers earlier than necessary and he is also signed through his age 36 season, which will occur in 2020. Both Longoria and Braun agreed to deferred compensation packages where part of their salaries are withheld and paid out each year after the end of the contract, interest free. For instance, Braun defers $4 mil from 2016-2018, and then $3 mil from 2019, and 2020. That money is paid July 1 of each year from 2022 thru 2031 in equal payments. That becomes a huge benefit to the Brewers.

I recently offered the possibility of a contract for ‘Cutch’s age 36 and it would bell curve – going up the first 2 years to $23 mil in the middle and then coming down in his age 35 and 36 seasons, a total of about $116 mil. This guy is one of the most recognizable players in MLB, an MVP already who could be in the Top 3 of the MVP voting in 2014, and the Pirates have a TV renegotiation that takes effect in 2018, if I am not mistaken. When he came to the Pirates, attendance was around 1.5 mil per year; in 2012 it passed the 2.0 mil mark, in 2013 it reach 2.25 mil, and we are on pace to possibly get as high as 2.5 mil through the turnstiles in 2014. Pay the man his money!

Walker is a hometown boy, a fan favorite, a switchhitter, and can play any position in the infield. I see a point where Hanson will be up, leading off and playing 2B, and Neil will be at 1B. I favor a long term contract if Neil is willing, meaning he has to take the physical problems into consideration also.

bucsws2014

At the time Cutch signed his first deal, nobody really knew what he would become. Now we know. So what makes you think he’d settle for your numbers when Mike Trout is scheduled to make $100 million over just 3 years (2018-2020) under his first long-term contract?

Agree with Tim on Walker and have said so repeatedly.

emjayinTN

bucs: This is Andrew McCutchen and not anyone else. He and his family have committed to this Pirate franchise and the community as much or more than any of the superstars of the Steelers or Penguins. He is special, and I see him as a person who is comfortable in a Pirate uniform.

bucsws2014

And that didn’t stop Derek Jeter, Chipper Jones, David Wright or anyone else you can think of as “the franchise” from getting stupidly rich and paid at a premium for their position. But, since you mentioned the Pens, maybe Nutting can make Cutch a minority owner to offset some of the salary demands :-)

Jared

My one concern extending ‘Cutch into the mid-to-late 30s is that he does a lot with speed and his defense has some question marks for me in CF already. I am not saying, really, anything negative about him and he’s a stud, but when you get by with speed and want to play CF aren’t there some concerns about longevity in your mid-thirties? If Cutch would move to a corner OF spot in a couple of years then certainly I would consider it because his bat is unlikely to go away, at least from an average perspective.

emjayinTN

bucs: Jeter and Jones are MLB Royalty and absolute locks to be in the HOF. Wright not so much. And, Chipper was an MVP and owns a +.900 OPS for his almost 20 years in the league.

bucsws2014

All of which supports Cutch backing up the Brinks truck to Nutting’s office.

Joe Sweetnich

Walker doesn’t hit well enough now to be a first baseman and this is his best offensive year. Too fragile for me. I trade him in the off-season if a good deal is there.

bucsws2014

I’m getting a bit tired of the “doesn’t hit well enough to be a 1b/3b” thing.

I’m not in favor of an extension, but while Walker’s .805 OPS is 2nd best among 2b in MLB and would only be 14th among 1b, that same production would be a HUGE improvement over the two current incumbents at 1b for the Bucs. And would be the best since Adam Laroche in 2008. In fact, his OPS in every season he’s played puts him higher than Davis/Sanchez. So put him at 1b. It’s not like the Bucs are going to spend to get a high OPS guy over there. Or they’d have done it already.

Jared

The thing I love about Josh Harrison’s year this year is that it really puts a spotlight on the fact that you do not have to really hit for home run power to be productive. He’s hitting for average, getting on base, stealing bases, hitting extra-base-hits…and his overall production (.860) is .80-points higher than Pedro Alvarez’ highest production year. Harrison’s 3.5 WAR is higher than Pedro Alvarez’ highest WAR year and there are still 40+ games left in the season for Harrison to add to.

Why am I mentioning Harrison? Because I really am a believer in the moneyball/sabermetrics style of roster/team management and Josh Harrison is demonstrating just how effective that can be, despite the fact that 3B is a “power position.”

Neil Walker would certainly represent an upgrade to the 1B position for a number of reasons: (1) his OPS would represent at worst a .50-point improvement in OPS at the 1B position for the Bucs, (2) looking at Alan Hanson (who would likely replace Walker you get a guy who has never had less than a .755 OPS which is very similar to what Walker did last year and you’d improve your leadoff spot/top of the order.

Like Josh Harrison’s situation: you do not have to have power to be effective in a “power position”…you just have to be an overall upgrade and, thus, equal more wins.

Newmie

Plus the fact that Walker’s health should improve without the rigors of playing 2nd. His hitting should improve with the move since it is an easier position on the body. I can see one year of Pedro at 1st and then he will be traded with Walker taking over when Hanson is ready.

emjayinTN

Newmie: No doubt getting “taken out” about 50 times a year does take a toll on a 2B, and it is a speed position. Without having to maintain that body type to play 2B, he could add muscle and be more of a HR hitter at 1B. He has worked his way from 12 to 14 to 16 HR’s in 2013 and is already at 16 in 2014 with 47 games left. One more thing – with a switchhitter at 1B, it eliminates the need for two players on the 25 man roster, thereby helping Hurdle with another player/hitter or pitcher.

Jared: Harrison is putting up “Mad Dog” stats this year and he was one of our best 3B ever.

Andrew

I agree with your general point, traditional positional strictures are just that. But your examples aren’t very illustrative, Harrison is hitting for power .195 ISO and .509 SLG, are power numbers when league average is .140 and .396.

Comparing Walker’s hitting to two first basemen performing near replacement level overstates his value at the position. Walker is a career 114 wRC+ hitter, league average first basemen hit between 110-115 wRC+, so Walker could hit around league average but the move to first is a long slide down the positional adjustments, some 15 runs.

Walker is rated between -4 to -7 runs below average at 2nd over the course of a season. The best first basemen
around +7 to +9 fielding runs/season, so Walker could accomplish that, but positional adjustment cancels out that gain. So then you are left with at best an average hitting, career .336 SLG vs LHP, above average fielding first basemen. This doesn’t seem like the type of player the Pirates should extend.

Jared

Never said extend him. Just said play him at 1B.

Andrew

Okay I agree with that.

Joe Sweetnich

And you shouldn’t be paying $7-10 MM/year for average (or less than average) first base production,

moose7195

The guys we’ve been trotting out there for the last 6 years don’t hit well enough to be first basemen. Neil is a solid hitter, and a big upgrade from the guys we have now. Not to mention that he’s showing some decent 1B HR ability this season. If he maintains that power, who’s to say that he can’t be productive

John Lease

Who on earth would ‘claim’ McCutchen needs to be extended 4 years early? This article doesn’t make much sense. And saying you wouldn’t get any discount in Walker’s free agent years is just your opinion, maybe he would. Now, why you would extend Polanco when he’s only played 50 some games in the majors, I couldn’t agree more. Give him a few years and see how he pans out. I don’t understand the push to do that so soon.

jaygray007

Right after Cutch’s 2 homer game vs the reds, there was a lot of talk about making mccutchen a pirate for life on the local radio and whatnot. Hasn’t been as often as Martin and Walker talk though, for sure.

And you’re right. Walker could give a discount. Who knows? My personal thinking is that if he was giving a big discount a deal would’ve happened already. Unless they’re THAT scared of what we will be like at 33… which is a pretty legit concern IMO.

moose7195

The problem is that in a few years, Polanco may not be able to be extended on a relatively cheap deal. If they can’t get that done then there’s almost no hope of an extension with him

mam995

Polanco is probably not turning down $75 mil. His “handlers” are. That kid doesn’t know what money looks like. He grew up dirt poor…eating beans and rice. He just wants to play baseball. Dealing with that part of the world, the Pirates are probably negotiating with the Spanish Mafia (like they did when they signed Luis Heredia). It was announced that the Heredia signed for $2.65 million. Yeah, and the Mexican League (aka: Mafia) took $2 million of it right off the top. That was THEIR cut. Look at the Dodger’s Yasiel Puig…he owes the Mexican Mafia 20% of ALL future earnings. They even dictate player movement. The Pirates thought that they had elite shortstop Miguel Sano all locked up. He wanted to sign with the Pirates who had befriended him since he was a little kid. His handlers however, directed him to the Twins for $3 million. The Pirates didn’t get a chance to match the deal. The Boston Red Sox had 3 (2 pitchers and a catcher) players in their minor league camp as guests that they wanted to sign. Those players were directed to the Pirates. Adrian Gonzales Sr (the Dodger’s first baseman’s father) who advises players is suing Major League Baseball over these types of transactions. MLB is mum on these deals. They kiss and never tell.

Andrew

This is a wholly ignorant post, Polanco is son of a Dominican
police officers. He comes from a family of civil servants, and was born in the Distrito Nacional, the capital, yes it is the Dominican Republic, but the country is classified as a middle income developing nation. Polanco was not born into extreme rural poverty. And the Beverly Hills Sports Council isn’t a front for a Mexican Cartel.

John Lease

Calling the Dominican Republic middle income is pretty optimistic. Better than Haiti and Somalia, certainly. If it was that much money(and who knows if it was), he was foolish not to sign, and the Pirates were fools to offer $75 million to someone who has only played this little. That’s generational life altering money. As it is, making ML minimum is more than almost anyone here will ever make in a single year.

And I’m not sure where the $75 million number comes from, Jeff Passan reported it was $25 million guaranteed, and I actually think the Pirates were asking a bit much for guaranteeing only $25 million and then asking for three team options. Considering salary inflation and Polanco’s prospect status they will need to improve the offer.

mam995

Andrew, you haven’t disproved anything in my post. If you weren’t such an obtuse sports head, you would understand that I being nuanced in my writings to make a point. I understand that Polanco has on face, an American Sports firm representing him to the Pirates, but my point is that these kids are not independent from the influences of the system that they come up in. If you even had a remote sense of reality beyond baseball stats, you would understand this. You called my post “wholly ignorant”. Tim, am I wrong about Heredia’s contract? Am I wrong about Yaiel Puig? Was I wrong about what happened to Miquel Sano? Am I wrong about Adrian Gonzales Sr having filed a lawsuit against MLB? Am I wrong about the influence that organized crime has in these countries (especially Mexico)? Andrew, you are a linear thinker. Doesn’t make you a bad guy. President Obama is a linear thinker. It just means, that when that type of person encounters divergent points of views (that they don’t agree with) they dismiss it out of hand, with a broad brush. To me, that’s just intellectual vapidness. It’s the same kind of intellectual dishonesty that you see occurring on college campuses today.They don’t like what is said by someone they just drown him out. No evaluation of the merits of the discourse…just debunk. I once told Tim that one of the reasons that I like this site is because more than just citing statistical rhetoric, he is a thinker. He thinks on more than just a superficial level. I respect that about him. I wish that everyone that visited this site did.

Andrew

This is a diatribe of red herrings. You have cavalierly painted all prospects of Latin American descent with an absurdly broad brush, while demonstrating no knowledge of the specific situation. Maybe Polanco simply turned down the offer because $25 million guaranteed wasn’t an accurate valuation.

What you term nuanced I see as the fallacy of a single cause. Do you have an actual point or specific information to add outside loose innuendo based on linking a Cuban escapee, disputes over what amounts to Mexican players’ transfer fee, and a Dominican prospect choosing sign for more money?
From your choice of an ad hominem retort, I am going to assume no.

mam995

“Unnecessary” being the operant word, Tim. I think the strategy of the “donut hole” contracts that buys out a players most productive years up and through several years of free agency makes good business sense. However, it doesn’t make sense if the contract is too exhorbitant. I mean, you have contractual control of a Joey Votto for six years…why assume a lavish guarantee that is so inherently ladened with risk coefficients if you don’t have to? Why, because he might get mad that he doesn’t have “security”? Hell, none of us has that in the real world. Now, that is not to say, that I would have agreed with what Branch Rickey did to Ralph Kiner after he had a good year, and Rickey cut his salary, I just think that you have to make the players (like an employee of any organization) EARN their money. Teams are (finally) starting to get away from those insane 10 year deals that Cano and Pujols signed. In a rational world, those contracts never did make sense. Especially after roids were banned from the game. Any big contract that takes a player into his mid thirties is a boondoggle waiting to happen. For reference, see the Yankees, see the Phillies, see the Mets (Curtis Granderson) with their albatross obligations. All of their worn-out and overpaid (and often injured) players were on the waiver wire this week. Nobody wants them (for the price). They might as well be take out trash.

Joe Sweetnich

VERY well written Tim, and a very good argument. I agree.

jaygray007

I am fine extending walker if walker becomes the 3b. I can’t imagine there are a ton of 6’3″ 210ish lb 33+ yr old 2b with bad backs running around.

But I am also fine buying low on Chase Headley. I see Headley and walker as being similar; Headley’s extremely good season a few years ago and this year’s lackluster performance notwithstanding. I like having JHay freed up to play all positions and not tied to 3b.

Hanson at 2b 4 lyfe

ElGaupo77

Cutch is worth $30M/yr right now. The Pirates have tremendous leverage. That’s why he could be extended to a “team friendly” deal at $16M a season through his 34 year old year.

Matt Beam

you’re dreaming that he would except that

elgaupo

Everyone said the same thing about his last contract. “He won’t sign for less than $100M”

Leverage is a big deal. Cutch has none right now and won’t for another couple years.

Matt Beam

he’s set for life now, the Pirates have no leverage unless Cutch felt he’s going to have a serious fall off in performance in the next 3-4 yrs, especially when big market teams continue to show a willingness to make a big splash; why would he except less per year than Joey Votto got from Cincinnati?

ElGaupo77

McCutchen just ranked 2nd in ALL of baseball for Dave Cameron’s trade value rankings. That means he has the 2nd best contract in all of baseball compared to his ability. That means he’s the 2nd most underpaid player in baseball. That means he’s losing LOTS of money every day on this contract.

Also, the last year of Cutch’s current contract is a team option. That’s even more leverage for the Pirates. It’s an extra year of control for the Pirates and insurance in case he starts stinking.

Matt Beam

the lack of PED’s now is why extensions that stretch into the mid-late 30’s are generally a bad idea. I love Cutch and would love to see him retire a Pirate but the reality is this won’t happen if he wants that one big contract to finish off his career, and you can’t blame him (for taking care of his family) or the Bucs FO (for keeping this team as competitive as possible for as long as possible) – blame Bud Selig and MLB

Rick Eger

You’re giving the Pirates…..one of the most cost prudent teams in baseball a rough time over payroll? Why not pick on the teams with 200 million dollar plus payrolls?

Rick Eger

Walker’s not gonna get a huge contract with his bad back and age creeping up on him!